(Last Updated On: July 1, 2020)

In the price action trading blueprint cost, I suggested. You generally, I would suggest that whenever you look at a particular stock that you might want to trade, always make sure the trading liquidity is liquid enough for the amount of capital that you have.

So now let me just give you an example. If, let’s say, you have $10,000 right now. So based on my suggestion, if you want to trade this stock … A, for example … based on my suggestion of 10 times of your total equity, which means that if you have $10,000 right now, you’re not holding onto anything, that means 10 times of your 10,000 will be 100,000. This means that if you decide to trade stock A, make sure that stock’s average trading value over the past, for example, 20 days or the past one month, the average daily trade value is more than 10 times equity, which means that it should be more than $100,000 because your equity is 10,000.

Alright? So this doesn’t mean that if, let’s say, you have $10,000, let’s say you plan to use $5,000 to buy stock A. It doesn’t mean that the average trading value should be 10 times of this 5,000. It should be 10 times of your entire equity. And equity means that it’s not just the monetary value that you have in cash is basically your entire equity. So if you have open positions and you have cash, your total equity is the amount of cash that you have not utilized plus the value of all those open positions that you have at that point in time. So you add them up together. That will be your current equity. Alright. So whenever you want to get into a stock, always make sure that the average trade value of that particular stock is more than 10 times, your total equity.

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